Gold prices were lower today ahead of the FOMC meeting announcement. The gold market is still likely experiencing some profit taking following gains seen in recent weeks, and may be gearing up for another crack at the psychologically important $1300 level.
In addition to profit taking and position squaring, gold may also have fallen in sympathy with crude oil which is losing ground today. Not doing gold any favors either, the dollar index is once again moving to the upside.
Following the release of the FOMC statement, the gold market did not show much of a reaction. The central bank reiterated that it would be patient with regards to interest rates. The Fed also appeared to sound upbeat on economic conditions, and did not give any clues or show any signs of potentially altering their plans at this point.
Stocks sold off in the immediate aftermath of the statement, and perhaps markets were looking for a signal about keeping changes in policy on hold until some time next year. The gold market has likely already priced in the initial rate hike sometime this year, although should the Fed change course it could potentially give gold a boost.
Gold and silver are both looking more and more like markets that have found a meaningful bottom. Given the recent upside in gold despite lower oil and dollar strength, there appears to be some real demand at current price levels.
Resistance in gold may be seen at the $1300 level and at last week's highs. A breach above those highs could set the stage for potential upside targets in the $1320 and $1340 areas. Near-term support may be seen at yesterday's lows and in the $1260 area.
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